TY - JOUR
AU - Blank,Rebecca M.
AU - Card,David
AU - Robins,Philip K.
TI - Financial Incentives for Increasing Work and Income Among Low-Income Families
JF - National Bureau of Economic Research Working Paper Series
VL - No. 6998
PY - 1999
Y2 - March 1999
DO - 10.3386/w6998
UR - http://www.nber.org/papers/w6998
L1 - http://www.nber.org/papers/w6998.pdf
N1 - Author contact info:
Rebecca M. Blank
University of Wisconsin
161 Bascom Hall
500 Lincoln Drive
Madison, WI 53706
Tel: 608-262-9946
E-Mail: rblank@chancellor.wisc.edu
David Card
Department of Economics
549 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-5222
Fax: 510/643-7042
E-Mail: card@econ.berkeley.edu
Philip K. Robins
E-Mail: probins@miami.edu
AB - This paper investigates the impact of financial incentive programs, which have become an increasingly common component of welfare programs. We review experimental evidence from several such programs. Financial incentive programs appear to increase work and raise income (lower poverty), but cost somewhat more than alternative welfare programs. In particular, windfall beneficiaries -- those who would have been working anyway -- can raise costs by participating in the program. Several existing programs limit this effect by targeting long-term welfare recipients or by limiting benefits to full-time workers. At the same time, because financial incentive programs transfer support to working low-income families, the increase in costs due to windfall beneficiaries makes these programs more effective at alleviating poverty and raising incomes. Evidence also indicates that combining financial incentive programs with job search and job support services can increase both employment and income gains. Non-experimental evidence from the Earned Income Tax Credit (EITC) and from state Temporary Assistance to Needy Families (TANF) programs with enhanced earnings disregards also suggests that these programs increase employment, and this evidence is consistent with the experimental evidence on the impact of financial incentive programs.
ER -